New order from Beshear aims to set protections as KY data center boom accelerates
Kentucky Gov. Andy Beshear is set to sign an executive order establishing new standards for data center developers in the state. The order mandates that developers must demonstrate they can cover their own costs without burdening ratepayers or the environment, addressing concerns over electricity, water use, and infrastructure. This marks a significant shift in the governor's approach to regulating the rapidly growing data center industry in Kentucky.
Kentucky Governor Andy Beshear announced an executive order Thursday, establishing new standards for data center developers seeking to build in the state. The order aims to ensure that data centers operate without shifting costs or environmental burdens onto Kentucky communities, requiring developers to demonstrate their ability to pay their own way.
This executive action signals a change in strategy for Gov. Beshear, who previously deferred to the legislature on ratepayer protection measures. The order mandates developers submit an energy plan to the Energy and Environment Cabinet, proving they can meet electricity needs without impacting existing utility customers. It also directs the Kentucky Public Service Commission (PSC) to deny proposed rate increases by utilities that attempt to pass data center costs onto consumers. PSC Chair Angie Hatton expressed gratitude for the framework, which she believes will protect Kentucky families.
Additionally, the order places new emphasis on environmental impacts, directing the Energy and Environment Cabinet to deny permits if a proposed data center adversely affects air quality, water use, water quality, or other natural resources. Energy and Environment Secretary John Lyons reiterated the cabinet's duty to enforce standards protecting human health and the environment. Developers will also be asked to commit to paying their full share of state and local taxes and engage directly with local communities regarding their projects and anticipated impacts.
The order drew support from state Democrats, including Senate Democratic Leader Sen. Gerald Neal, who emphasized that Kentucky is open for investment but not at the expense of its families or resources. Republicans, however, criticized the order as a "publicity stunt," with Senate President Robert Stivers suggesting it was "more political theater than public policy." He and Congressman Brett Guthrie noted ongoing efforts to address similar issues at the federal level, with Guthrie's work on legislation requiring state utility regulators to consider large-load standards for data center customers. While Beshear's order stops short of a statewide moratorium, unlike a recent move in Texas, it aims to establish essential conditions for data center development.